- May 31, 2023
- Calibre Consulting Group, LLC
Ryan Reaume Riley (CRD#: 2684692) is a previously registered Broker and previously registered Investment Adviser.
He entered the securities industry in 1996 and previously worked for Viewpoint Securities, LLC; Gunnallen Financial, Inc.; Sentra Securities Corp.; UBS Painewebber, Inc.; and Smith Barney, Inc.
Current And Past Allegations Of Conduct Leading To Investment Loss
According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), in May 2023, the United States Securities & Exchange Commission sanctioned Ryan Raume Riley with a permanent bar on association with a broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent or NRSRO indefinitely, beginning May 15, 2023. The FINRA sanction states, “The Securities and Exchange Commission (“Commission”) deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted pursuant to Section 203(f) of the Investment Advisers Act of 1940 (“Advisers Act”) against Ryan R. Riley. The Commission finds that on March 2, 2023, a judgment was entered by consent against Riley, permanently enjoining him from future violations of Section 17(a) of the Securities Act of 1933 (“Securities Act”), Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Advisers Act, in the civil action entitled Securities and Exchange Commission v. Ryan R. Riley, Civil Action Number 23-00273, in the United States District Court for the Eastern District of Virginia. The Commission’s complaint alleged that between January 2014 through September 2019, in connection with the sale of promissory notes and participating units, Riley misappropriated client and investor funds for personal use and trading and misled clients and investors by making materially false and misleading statements to those clients and investors regarding his use of their funds.”
In addition, Ryan Reaume Riley has been the subject of three customer complaints, including the following:
- March 2023 — “Plaintiff Securities and Exchange Commission (the “Commission”) alleges that this matter concerns a fraudulent investment scheme orchestrated by Defendant Ryan R. Riley (“Riley”), an investment adviser, through purported energy companies he controlled. From in or about January 2014 through in or about September 2019 (the “Relevant Period”), Riley solicited investments in these companies. He obtained over $480,000 from about a dozen individuals, including his advisory clients and other investors. Riley induced them to purchase securities through materially false and misleading statements and omissions about the companies’ prospects of engaging in lucrative energy deals. Riley also misrepresented and concealed his misuse of investor and client funds. Contrary to what he told investors and clients, Riley used their funds for personal expenses such as paying his own grocery, restaurant, mortgage, and credit card bills. Riley lost nearly all of the remaining funds through day trading. Instead of disclosing these losses-or revealing to his clients and investors how he had used their money-Riley lied about the energy deals he claimed his companies were undertaking. By engaging in the conduct described in this Complaint, Riley violated Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940.” The United States Securities & Exchange Commission sanctioned Ryan Reaume Riley with officer/director prohibition; disgorgement; prejudgment Interest; and civil penalty; undertakings via an injunction.
- February 2012 — “FINRA RULE 2010, NASD RULES 2110, 3040: RILEY PARTICIPATED IN PRIVATE SECURITIES TRANSACTIONS, THROUGH HIS COMPANY, WHILE ASSOCIATED WITH HIS MEMBER FIRM WITHOUT PROVIDING PRIOR WRITTEN NOTICE TO THE FIRM. RILEY RECOMMENDED THESE PRIVATE SECURITIES TRANSACTIONS TO CLIENTS, INVESTORS, AND CUSTOMERS OF HIS FIRM AND HE RAISED OR PARTICIPATED IN GETTING APPROXIMATELY $10,759,048 THROUGH THESE INVESTMENTS. RILEY ALSO PURCHASED INVESTMENT SECURITIES IN A COMPANY IN THE FORM OF A PROMISSORY NOTE FOR $10,000. RILEY RECEIVED COMPENSATIONS IN THE AMOUNT OF APPROXIMATELY $138,101.06, AND IN THE FORM OF A UNIT IN A COMPANY. RILEY RECEIVED REIMBURSEMENT FROM A COMPANY FOR $3,075.25, PLACEMENT FEES FROM A COMPANY IN THE AMOUNT OF APPROXIMATELY $9,760, AND WAS REIMBURSED $3,739.55 FOR HIS EXPENSES BY A COMPANY. RILEY REFERRED HIS CLIENT AND A FIRM CUSTOMER, WHO WERE LOOKING INTO 1031 EXCHANGE OPPORTUNITIES, TO A MANAGING MEMBER OF A COMPANY SEEKING TO PURCHASE AND DEVELOP VARIOUS REAL ESTATE PROJECTS, INCLUDING AN APARTMENT COMPLEX. THEREAFTER, HIS CUSTOMER AND TWO OTHER INVESTORS PURCHASED TENANTS-IN¬-COMMON INTEREST IN THE PROPERTY VIA 1031 EXCHANGES FOR A TOTAL OF $310,000. RILEY RECEIVED A FEE OF $12,875.32 FROM THE COMPANY FOR HIS REFERRAL. RILEY AND AN INDIVIDUAL ESTABLISHED A FUND, WHICH IS A SEGREGATED PORTFOLIO COMPANY THAT RAISED APPROXIMATELY $2.5 MILLION FROM INVESTORS WHO PURCHASED REDEEMABLE, NON-VOTING, PARTICIPATING SHARES IN THE FUND. RILEY RECEIVED MANAGEMENT FEES.” FINRA suspended Ryan Reaume Riley from associating with any FINRA members in any capacity for 18 months beginning March 5, 2012 and ending September 4, 2013. For a copy of the FINRA disciplinary action, click here.
- September 2001 — “CLAIMANT INITIALLY ALLEGED THAT 77% OF TRADING TRANSACTION IN HIS TWO ACCOUNTS OVER AN 18 MONTH PERIOD WERE UNAUTHORIZED AND THAT MANY OF THE PURCHASES OF SECURITIES BY CLAIMANT WERE OF UNSUITABLE SECURITIES. IN THE ARBITRATION, CLAIMANT WITHDREW ALL CLAIM WITH THE EXCEPTION OF AN UNSUITABLE RECOMMENDATION.” The customer dispute was resolved with an award of $26,000 to the claimant.
For a copy of Ryan Reaume Riley’s FINRA BrokerCheck, click here.
We Help Investors Recover Investment Losses
Financial advisors have a legal and regulatory obligation to recommend only suitable investments that are appropriate for their clients’ needs and objectives. Their employing brokerage firm has a legal and regulatory obligation to supervise the Financial Advisors’ sales practices and dealings with clients. To the extent any of these duties are breached, the customer may be entitled to a recovery of his or her investment losses.
Reasonable basis suitability requires that a recommended investment or investment strategy be suitable or appropriate for at least some investors. Reasonable basis suitability requires an advisor to conduct adequate due diligence so that he or she can determine the risks and rewards of the investment or investment strategy.
Quantitative suitability requires a brokerage firm or financial advisor with actual or de facto control over a customer’s account to have a reasonable basis for believing that a series of recommended transactions – even if suitable when viewed in isolation – is not excessive and unsuitable for the customer when taken together in light of the customer’s investment profile. No single test defines excessive activity, but factors such as the turnover rate, the cost-equity ratio, and the use of in-and-out trading in a customer’s account may provide a basis for a finding that a member or associated person has violated the quantitative suitability obligation.
Customer-specific suitability requires that a member or associated person have a reasonable basis to believe that the recommendation is suitable for a particular customer based on that customer’s investment profile. Among the criteria that a financial advisor must evaluate to satisfy his or her customer-specific suitability obligations include the investor’s age, tax status, time horizon, liquidity needs, and risk tolerance; a client’s other investments, financial situation and needs, investment objectives, and any other information disclosed by the customer should also be considered.
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